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Elon Musk Lines up $46.5 Billion in Financing, Exploring Tender Offer for Twitter

Elon Musk Lines up $46.5 Billion in Financing, Exploring Tender Offer for Twitter

CNBC’s David Faber said Musk won’t have the ability to “finalize a tender offer for Twitter with the poison pill in place.”

Elon Musk said he is exploring a tender offer to acquire Twitter shares from shareholders. He also lined up $46.5 billion in financing.

Musk made this decision since Twitter’s board has not responded to his offer to buy the platform.

From the new filing (Reporting Person is Elon Musk):

Twitter has not responded to the Proposal. Given the lack of response by Twitter, the Reporting Person is exploring whether to commence a tender offer to acquire all of the outstanding shares of Common Stock (together with the associated rights issued pursuant to the Rights Agreement (the “Rights” and, together with the Common Stock, the “Shares”)) that are issued and outstanding (and not held by the Reporting Person) at a price of $54.20 per share, net to the seller in cash, without interest and less any required withholding taxes, subject to certain conditions (the “Potential Offer”), but has not determined whether to do so at this time.

To finance the Proposed Transaction or a Potential Offer, entities related to the Reporting Person have received commitment letters committing to provide an aggregate of approximately $46.5 billion as follows:

(i) A debt commitment letter, dated April 20, 2022 (the “Debt Commitment Letter”), from Morgan Stanley Senior Funding, Inc. and certain other financial institutions party thereto as commitment parties (collectively, the “Commitment Parties”) pursuant to which the Commitment Parties have committed to provide $13 billion in financing to the Reporting Person and related entities as follows: (a) a senior secured term loan facility in an aggregate principal amount of $6.5 billion, (b) a senior secured revolving facility in an aggregate committed amount of $500 million, (c) a senior secured bridge loan facility in an aggregate principal amount of up to $3 billion and (d) a senior unsecured bridge loan facility in an aggregate principal amount of up to $3 billion ((a) – (d) collectively, the “Debt Facilities”);

(ii) A separate debt commitment letter, dated April 20, 2022 (the “Margin Loan Commitment Letter”), from Morgan Stanley Senior Funding, Inc. and certain other financial institutions party thereto as commitment parties (collectively, the “Margin Loan Commitment Parties”) pursuant to which the Margin Loan Commitment Parties have committed to provide $12.5 billion in margin loans (the “Margin Loan Facility”), the proceeds of which will be distributed or otherwise made available to Purchaser; and

(iii) An equity commitment letter, dated April 20, 2022 (the “Equity Commitment Letter”), from the Reporting Person pursuant to which the Reporting Person has committed to provide equity financing for the Proposed Transaction or the Potential Offer sufficient to pay all amounts payable in connection with the Offer and the Merger (plus related fees and expenses), net of the amounts to be funded pursuant to the Debt Commitment Letter and the Margin Loan Commitment Letter, which is currently expected to be approximately $21 billion (the “Equity Financing”).

Summary: Musk has $25 billion in debt financing from Morgan Stanley, Barclays, Bank of America, BNP Paribas, Mizuho Bank, MUFG, and Société Générale. His shares in Tesla secure about half that amount.

Musk is also committing $21 billion in equity himself. A source told The Wall Street Journal he might bring in an equity partner.

Musk bought more than a 9% stake in Twitter. The board invited him to join, but he would have to cap his stock ownership at 14.9%. He said no.

Then Musk offered to buy Twitter for $54.20 a share, which is about $43 billion. But then Twitter adopted the “poison pill” to stop a hostile takeover.

CNBC’s David Faber said Musk won’t have the ability to “finalize a tender offer for Twitter with the poison pill in place.”

Can Musk do all of this? He would need to concentrate on those who own a ton of Twitter shares like the Saudis. They already said no to his buying offer.

More than likely the board and shareholders want to see a higher price.

Even if Musk accumulates more shares the board can still tell him no. Should they? No. But they have the ability to say no.

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Comments

He ought to spend about 100M gutting their engineering teams of actual talent.

“Even if Musk accumulates more shares the board can still tell him no. Should they? No. But they have the ability to say no.”

There’s more than one way to catch a rabbit.

Morning Sunshine | April 21, 2022 at 3:23 pm

he is a genius. Very succinct take down of the Saudis ownership in Twitter. Two questions. Not an essay that people can refute; just 2 questions to make people *think.* Especially after all the pearl-clutching of the saudi “journalist” killed by the saudi .gov

with 2 questions he exposes a dark underbelly of twitter. How many others will try to fight him.

    Kwiznos Haagendazs in reply to Morning Sunshine. | April 21, 2022 at 7:52 pm

    Can Musk do all of this? He would need to concentrate on those who own a ton of Twitter shares like the Saudis. They already said no to his buying offer.

    The Saudi in question, Alwaleed Talal, sold all his Twitter shares in 2019. See: @zerohedge

2smartforlibs | April 21, 2022 at 3:34 pm

The board can only say no so many times before they violate their fiduciary duty to the shareholders.

    daniel_ream in reply to 2smartforlibs. | April 21, 2022 at 3:50 pm

    How many divisions has the Pope?

    CommoChief in reply to 2smartforlibs. | April 21, 2022 at 3:50 pm

    Given that the last trade price of Twitter as I composed this was $46.93 and the proposed buyout is $54.20 how does the board justify not at least putting it to shareholder vote? That’s a difference of 15 1/2 % above current market price today post announcement of Musk’s financing. The first rule of trading or investing is that something is only worth what the other party will pay; future projections and overly optimistic valuations are faire dust in compassion to an actual offering price.

      Because putting it to the shareholders is surrendering. Accepting bid is surrendering. Going silent gives them hope for a miracle. They had no plan for making Twitter work as a profit-making enterprise. They are social messaging minded. They have no idea what they are doing.

      Underpants Gnome Business Plan:

      Step 1- Steal underpants.
      Step 2- ????????????????
      Step 3- Collect profits

    Exiliado in reply to 2smartforlibs. | April 21, 2022 at 6:06 pm

    The State Of Florida is already considering legal options to go after the board for such failure.

    Ironclaw in reply to 2smartforlibs. | April 21, 2022 at 7:31 pm

    I would say they already have since he offered nearly 20% more than the trading price of the stock at the time.

Steven Brizel | April 21, 2022 at 4:29 pm

Go Musk Go!

MoeHowardwasright | April 21, 2022 at 4:32 pm

CIA, FBI, DIA, NSA, State Dept, etc, will not permit twatter to be sold to Musk. 5 Eyes use twatter to shape opinion and overthrow governments. They will NOT, Repeat, NOT give up that power. That’s their choice, but making that choice they demonstrate once and for all that they in fact have and continue to run twatter.

    You are wrong. What are they going to do? Kill him? Arrest him and the banks helping him? Everyone who has investments, a pension plan or any kind of property is being defended by Musk here. This is the opening battle against ESG where your investor rights are subordinated to global interests. As a fiduciary myself, I am stuck in the middle. Do I protect my clients? Or am I now obligated to allow their investments to be directed based on what the government tells the board is equitable or what is best for racial justice or for the health of the planet? Every time you invest, are you willing to allow your wealth to be reassigned to someone “less fortunate”?

    Looks like you need a lesson in human nature. Or maybe you’ve been broke all of your life and just don’t understand what it means to have money?

    CommoChief in reply to MoeHowardwasright. | April 21, 2022 at 6:54 pm

    I am not totally convinced of the ‘Jacks Magic Coffee Shop’ narrative that you imply; it gives too much unearned competence to the IC. I don’t rule the broad strokes and in fact believe that it works to facilitate collection and scrutiny of metadata and to shape public discourse. There are limits though and the IC are not ten feet tall and bulletproof. They make plenty of errors, like when someone such as Musk steps up to buy one of these companies out of the blue and upsets the apple cart because these IC clowns failed to predict it or have a plan when it happens.

    In Musk’s case, it’s the SEC and FAA.

Steven Brizel | April 21, 2022 at 4:35 pm

Musk despite everything else he is behind could be known as the man who saved the First Amendment

    henrybowman in reply to Steven Brizel. | April 21, 2022 at 7:28 pm

    And this is scary. If the First Amendment needs the miraculous intercession of the richest man in the universe to save it — like America needed the outrageous and totally unexpected intercession of an un-swampified maverick to stop the Woke Reset in its tracks for four years — we’re toast. There’s only so many miracles that can happen in a row. While God may move in mysterious ways, at least some of the time it can’t all be about us.

      Ironclaw in reply to henrybowman. | April 21, 2022 at 11:09 pm

      How many times has the country been saved from certain doom by the actions of exceptional men? Quite a few by my reckoning and one of them before we even inaugurated our first president.

“CNBC’s David Faber said Musk won’t have the ability to “finalize a tender offer for Twitter with the poison pill in place.”

Can Musk do all of this? He would need to concentrate on those who own a ton of Twitter shares like the Saudis. They already said no to his buying offer.”

First of all, Faber hasn’t done his homework.

Soon after Musk made his bid, Vanguard stepped up and increased their ownership share to 9% matching Morgan Stanley and Musk. I doubt they did so to lose even more money on Musk failing.

Morgan Stanley is part of the consortium ponying up another $13B debt facility secured by Musk’s Twitter and Tesla shares and other unnamed participants contributions. So as a shareholder, MS is stepping up to get the deal through.

Jack Dorsey? He has been throwing plenty of shade at his fellow Twitter board members.

https://www.cnbc.com/2022/04/18/twitters-ex-ceo-criticizes-board-musk-says-they-own-almost-no-shares.html

He also followed that up later with a tweet castigating CNN.

Dorsey has had a very turbulent and hostile relationship with Twitter’s woke board and so is very likely looking for a way out while not losing $5B. He is also CEO of Block (formerly Square) which is probably where h would probably like to focus all of his attention. His parting words at the news of Musk’s bid indicated that he was ashamed of Twitter and his own contributions to the problem.

I am looking for other players to step up and they may already have in this unnamed group. Goldman Sachs dumped all of the there shares last year parting with a final price target of $30. Fidelity also dumped all of their shares. All of them would stand to make money by taking sides in this epic battle of capitalist shareholders vs ESG stakeholders.

The current board has little ownership in the company and so their personal interests do not line up with shareholders’ interests. Everyone in this new consortium helping Musk share one thing: they all have fiduciary obligations to protect shareholder interests. This is the first major battle in “The Big Reset” where stakeholders seize control of corporations by relieving boards of their fiduciary duty to protect shareholder interests.

Musk is going to win this going away and the board members are going to be sued not only as members of the board but individually. Another reason why I believe Jack Dorsey is separating himself from the board and will side with Musk in taking them down. I’ll let the lawyers and pretend lawyers here fight that out. But I can’t see a court stepping in defending the board. I’ll bet the employees would be relieved to get $54.20 or more rather than $0 which is why they are blocking any attempt to wage a proxy war. They are about to lose the first major “Big Reset” battle and it could be a pivotal loss.

This will be an earthquake among the woke corporations. Is this another reason why Disney, Netflix, and the rest are getting clobbered in the markets the last couple of weeks? How many American parents who are fed up with what the government is trying to do to their kids are selling their shares across the board? Wouldn’t the mutual fund companies currently pitching ESG investing be taking red pills right now? They are fiduciaries!

Your move Faber. Come up with something less pedestrian please.

    Yeah- I don’t personally know anyone who uses the platform. It could go away tomorrow and most productive Americans wouldn’t know.

    I only see it when my favorite news outlets quote it.

Vanguard is part of the global cartel, they didn’t do that to make money, they did it to water down Musks power

    You too? It’s all just moving game pieces on a board to you? Well those game pieces are people and when you get down to the most basic of basics, we are all pretty much all alike. I don’t care if you work for Twitter, or the FBI, or whatever. You almost certainly have a retirement plan and a savings account. My own account custodian is pitching ESG as the greatest thing since sliced bread. I would strongly encourage you to take a look at where your investments are custodied and how the managers of your investments are almost certainly buying into ESG without thinking it through. We ALL need to think this through because we are ALL at risk.

    Let’s say you are a public school teacher who has a robust pension plan that has been disinvesting in Israel, oil companies, defense contractors and instead investing that money in Russian bonds, green companies, and other poor investments. Let’s say that the only reason your retirement plan is still around is because it was bailed out (again) by Congress in their multi-trillion dollar “infrastructure bills. Now you are facing the likelihood that your plan is going belly up but Musk wants to buy it out for 50% more than it was worth in your last statement. Where does being a “liberal”, “conservative”, Jew, Arab, black, Asian, Mexican or whatever factor into this? Get it?

    EVERYONE INVOLVED in this Twitter deal is either facing that choice.,Those FBI agents, Twitter employees, Jack Dorsey, shareholders and lenders have or will soon be experiencing a “there for the grace of God go I” moment. That is called being “red pilled.

    Try to find any situation where people will act any other way than to preserve their money. Believe me, people with money would rather lose their right arms than lose their money. Period. That is the way the world works.

    THAT is why Musk will win this in the end and in a landslide. The board may believe they are not exposed because they own so few Twitter shares but once they are sued personally and suddenly realize that their entire net worth is at risk, they will be red pilled about reality. This will trigger a ripple of fear throughout the boardrooms of all corporations. Book it.

    So the “Big Reset” is a good idea? Lots of people being red pilled once already and plenty more will be as this thing starts rolling. Thank God Musk is going to open this war with a major victory for free people fighting the Fourth Reich tyranny descending upon us.

Twitter isn’t worth $10.00

You can’t finalize a tender offer when a poison pill exists? That’s nonsense, the tender offer can require any poison pill be rescinded. If I was Musk my new tender offer would have a lower price. $54.20 was the price before they spitefully reacted by creating a poison pill, $50 or less now.

At least Jim Jordan’s team is paying attention:

https://www.cnbc.com/2022/04/22/republicans-demand-twitter-board-save-records-on-musks-bid.html

Apparently, the rest of the Republicans have too busy reading this thread’s defeatists. It is so easy to argue that we are going to lose. It only takes one path to victory. But you have to see it first then commit to making it happen but….. hey, “trying is the first step to failure” right?

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